Judgment summary: The physical sales channels provided according to the services of supermarkets or department stores allow the manufacturers or sellers of all kinds of commodities to display their commodities at the same location, so as to meet the various needs of customers. Therefore, all kinds of daily necessities, such as agricultural, animal and aquatic products, various foods, beverages, clothes, furniture, hardware, household articles for daily use, medicines, chemical products, cosmetics, culture and education products, recreation products and other products are available in the supermarkets or department stores. However, the commodity trademarks of the products sold in supermarkets or department stores may not necessarily be the same as the service trademarks used by these places. For example, the trademark of bedding sold in the Pacific Department Store Co., Ltd. may not be produced or owned by Pacific, but one of various domestic or overseas brands. Another example is that the trademark of commodities sold in Carrefour or RT-MART may not be Carrefour or RT-MART, either.

In the general conception of society and market transactions, consumers regard supermarkets and department stores as places that stock and sell thousands of commodities from various brands, and consumers can clearly see who the manufacturers of the commodities are according to their packaging and labels. No consumer would think that such a store actually manufactures all these various brands. Therefore, even if a trademark of the store is the same as or similar to a trademark of commodities from another manufacturers, no consumer would assume that there is a relation between the store and the commodities identified by the same or similar trademark.

The defendant in this case is a store named “Eslite Furniture”, which only sells furniture; the complainant in this case has the famous trademark “Eslite”, which deals with books and stationery products. Although the complainant uses the trademark at issue in department stores, but few consumers confuse the trademarks of commodities sold in these stores with those of the stores themselves, because consumers know that department stores are places that provide various goods, and in particular, these goods are sold from shelves operated by others?as?part of each of their own business models. The services designated by the trademark at issue of the complainant are used for supermarkets and department stores, and the commodity categories of the complainant are not specific. In addition, the store name at issue used by the defendant, which is the same as the trademark of the complainant, is only used for specific furniture commodities. Therefore, the two are obviously different, and it is difficult to determine whether or not the defendant's actions violate the provisions of Article 81 in the Trademark Law, either subjectively or objectively.

★ Civil Judgment No. 98-Min-Shang-Shang-18 of the Intellectual Property Court in 2009Issue: calculation of the amount of damages caused by trademark infringement

Judgment summary: According to the regulative system framework and amendment rationale of Items 1 and 2 of Article 63 in the Trademark Law, the liabilities for compensation for damage caused by trademark infringement do not depart from the core concept of “compensation of loss” in the theory of damage compensation. Clause 3 of Item 1 of this Article is only to exonerate trademark owners from burden of proof in terms of the actual amount of damages, thus the law stipulates the statutory amount of compensation that the actual amount of damages is calculated and determined on the basis of a single retail price multiplied by the number of commodities that infringe the trademark right. Moreover, lawmakers considered a situation in which the amount of compensation obtained by the trademark owner, calculated as stated above, is obviously disproportionate and thus entitled the court the right to discretionarily reduce the amount of compensation in accordance with Item 2 of the same Article, so that the amount of compensation obtained by the trademark owner can match with his or her actual damage, and to avoid the suspicion of unjust enrichment or punishment of the infringer.

As to the determination of the damages awarded to compensate the trademark infringement, the infringement circumstances taken by the infringer and the damages to the trademark owner shall be primarily taken into account. Factors that shall also be considered are the operation scale of the infringer, the quantity of commodities with a counterfeit trademark, the period of infringing activities, the extent of identity or similarity of the counterfeit trademark, the nature and characteristics of genuine commodities with the registered trademark, the distribution conditions in the market, and the range and degree of damage that may be caused by the infringer to the trademark right created and maintained by the trademark owner.

Issue: compensation for trademark owner's reduction and loss of business reputation

Judgment summary: Item 3 of Article 63 in the Trademark Law has expressly stipulated that a trademark owner can claim an additional reasonable amount of compensation for the reduction and loss of business reputation suffered from infringement.

The “business reputation” refers to business credit or commercial goodwill. The loss of business reputation in this Article usually refers to the business reputation or commercial goodwill of the injured person that has been derogated, owing to the injuring person deceiving consumers by selling counterfeit commodities of low quality with an identical or similar trademark, which causes consumers to assume that the quality of the commodities or services of the injured person is low. Where the quality of the commodities of the injuring person is not low but he or she uses the identical or similar trademark for identical or similar commodities or services, consumers will certainly misunderstand that the commodities or services of the injuring person and those of the injured person come from the different origin and do not have affiliated, franchising or licensing relationships. This causes the injured person’s business loss (which falls within the range of compensation for damages under Item 1 of the same Article), but does not necessarily cause the reduction and loss of business reputation or commercial goodwill for his or her commodities or services.

Therefore, if the injured person claims a reasonable amount of damages from the injuring person in accordance with Item 3 of Article 63 in the Trademark Law, then the injured person must adduce evidence to prove that he or she has suffered from the reduction or loss of business reputation caused by the trademark infringement made by the injuring person; otherwise, his or her claim shall not be accepted.

Issue: bona fide use of trademark and limit of production and distribution scale

Judgment summary: Item 1 of Article 30 in the Trademark Law stipulates that “The following circumstances are not restricted by the validity of trademark right of others… People have been making bona fide use of the identical or similar trademark for the identical or similar goods or services prior to the date of the application for trademark registration by others. However, the use shall be within the limit of the originally used goods or services, and the trademark owner may request those people to attach appropriate and distinguishing labels for identification.”

This provision was listed as Item 2 of Article 23 in the Trademark Law before amendment. In the amended draft of this Article, submitted by the Executive Yuan to the Legislative Yuan, its proviso expression is “shall be within the limit of originally used goods and that of the original production and distribution scale.” However, the expression “original production and distribution scale” was deleted in the Legislative Yuan's second review. It can be understood that the expression “shall be within the limit of originally used goods or services” in this Article does not refer to the limit of production and distribution scale, but there is a doubt about the actual meaning of the “production and distribution scale.” Does it refer to a limitation of the "number of stores” or a limitation of “geographical regions?” In other words, there is a doubt whether the people making prior bona fide use can increase the number of stores providing commodities or services or establish branch stores in different geographic regions.

It is believed that the purpose of the deletion of “production and distribution scale” in the second review of this Article was only to relax the restrictions on the number of branch stores, and not the expansion of geographic regions. Therefore, if the geographic distance between the established branch store and the original store is too large, then such use shall not be considered a reasonable bona fide use. Considering the original purpose of legislation, the IP Court does not think that the expression “shall be within the limit of originally used goods or services” can be expanded to cover the limitation of production and distribution or the operation scale, since the expression “shall be within the limit of original production and distribution scale” was deleted on purpose during the legislation process. That is to say, since this expression was deleted during the amendment to this Article, the purpose was not to impose a limitation of original production and distribution scale. Therefore, the expression “However, the use shall be within the limit of originally used goods or services” contained in the amended provision shall be interpreted as no limitation of geographic region or business scale.

The presentation forms of production and distribution scale may include expanding the business area of the original store at the same address, opening branch stores in the original geographic region or establishing branch stores in different geographic regions. Lawmakers should have anticipated the above different forms of production and distribution scale when they deleted the expression. The expansion limitation of the original store's business area only in the same address, or the limitation of the establishment of branch stores only in the original geographic region obviously constitutes the unauthorized addition of limitation that is not expressly stipulated in the literary content of the provision, and thus is an interpretation with no legal basis.
Furthermore, in terms of the protection for trademark owners in the Trademark Law, it contains provisions of exception for people making prior bona fide use. These provisions are made mostly because prior users of the? trademark did not realize that he or she should apply for trademark registration, and the trademark had been subsequently filed by others. If the person who enjoys the priority of protection of rights files the trademark application before the prior trademark user, by taking advantage of the fact that the prior user who does not know a trademark application should be filed, while the person making prior bona fide use under this circumstance can not continue to develop his or her business, it not only improperly restricts the people’s right to work and the right to live, but also does not conform to the principle of good faith. Since this provision expressly stipulates no limits in terms of geographic region or operation scale, then according to the principle of “nulla poena sine lege” (“no penalty without a law” in Latin), it is not suitable to make an expanded interpretation to unduly restrict the rights of bona fide prior user, and it is not suitable to expand the applicability of the criminal law.

Judgment summary: the function of a trademark is to identify the commodities manufactured, produced, processed, selected, wholesaled or managed and distributed by the trademark owner, so as to allow general purchasers to recognize the products of the said trademark and, through the mark, to distinguish the origin and reputation of the commodities, thereby achieving the legislative purpose of this law for “safeguarding consumers’ interests, maintaining fair competition in the market and promoting normal development of industrial and commercial enterprises.” Therefore, a trademark is a mark made by commodity or service providers for the purpose of distinguishing their own commodities or services from those of the same or similar categories provided by others in the competitive marketplace, so as to manifest the origin and quality of commodities or services for general purchasers to identify and select.

No matter what the selected component or pattern of the trademark is, to achieve the basic purpose of allowing general commodity purchasers to recognize and distinguish different origins of commodities, the trademark must be sufficiently distinctive to be capable of making relevant consumers recognize the sign of his or her commodities or services, and distinguish his or her commodities or services from those provided by others. Moreover, after the registration of the trademark, in order to achieve the purposes of recognition and market competitiveness, trademark owners who enjoy exclusive rights must also actively (in accordance with Clause 2 of Item 1 of Article 57 in the Trademark Law) and correctly use their own registered trademarks to avoid hindering others’ opportunities to enter the competitive market.

For the meaning of “legitimate use” as defined in Article 6 of this law, firstly, users shall have their trademarks labeled as their entirety on all legitimate articles (the use of trademarks in their entirety makes recognition easy for consumers so as to avoid misidentifications). Secondly, users shall market and sell their trademarked commodities in Taiwan’s market, or else export and promote their trademarked commodities. Accordingly, since a trademark owner–after a trademark registration–has obtained the right to exclude others’ use of the identical or similar trademark designated for identical or similar goods, the proprietor with the exclusive right shall, based on marketing purposes, have his or her trademark used in its entirety on commodities, packaging and containers thereof, and shall not use the trademark with arbitrary divisions, alterations or additions. Moreover, the incomplete use of a trademark shall also be in accordance with the provisions of Article 58 of this law to identify his or her own commodities, so as to safeguard consumers’ interests.
Otherwise, there will be a risk of trademark cancellation. Consequently, the scope of legal protection of such a trademark shall be relatively narrowed down to achieve the legislative purposes of the Trademark Law.

Issue: obtaining distinctiveness according to the “secondary meaning” of a trademark

Judgment summary: Since general consumers repeat their selecting and purchasing behaviors at different times and places according to their incomplete and unclear impressions of trademarks, rather than by taking trademarks with them for parallel comparison, minor differences are for consumers to distinguish. The defendant in this case argues that the men’s leather products detained haven’t used the complainant's trademark at issue, “BURBERRY”, but have used its company’s registered trademark “ZODENCE”.

There is definitely no possibility of causing confusion or misidentification to relevant consumers in terms of the complainant’s commodities. However, the check pattern of the trademark at issue has obtained distinctiveness according to the “secondary meaning” of the trademark as described above. After long-term, continuous use by the complainant, the feature has already become an identifiable mark for this business commodity in trade, allowing relevant consumers to recognize that the commodities with this specific color arrangement and stripe design come from the complainant’s company. In addition, the appearance of the men’s series of leather products manufactured by the complainant is usually designed with a plain background color, and their liners or intermediate layers use the check pattern of the trademark at issue over a large area (the original judgment volume is attached with the photos of real leather products manufactured by this company presented in the Court by the complainant for reference).

As shown by the exhibits of the detained leather products numbered 1 to 9, their appearance takes black as the only background color, and their liners or intermediate layers use a check pattern that is similar to that of the trademark at issue over a large area. The composition of the whole commodity is similar to that of the men’s series of leather products of the complainant. Although the detained leather products use the mark of “ZODENCE”, the written characters of this mark occupy a very small area of the overall appearance of the leather products, and the surrounding area uses the stripe arrangement that is similar to the check pattern of the liners (referring to Pages 77 to 83 and Page 244 of the investigation volume).

Obviously, during selection and purchase, relevant consumers cannot clearly distinguish the difference with only this minor difference, and it may cause relevant consumers to believe that the detained leather products come from the complainant’s company or are related to the complainant’s company. Therefore, the defendant's argument that the detained leather products will not cause confusion and misidentification to relevant consumers is not admissible.